GEORGETOWN | Deutsche Bank has filed a foreclosure lawsuit against Ayoluwa Dayo Smith, former chief financial officer for Five Rivers Community Development Corp., saying Smith never made a payment on a $252,000 loan she received Nov. 8.
The Deutsche Bank loan is one of three refinance loans Smith took out against her home in The Arbors subdivision in the months before the Five Rivers nonprofit agency closed amid a financial scandal.
In all, Smith received $124,000 in equity payments between June 23 and Nov. 8 by refinancing her home with larger mortgages.
Smith moved to Buford, Ga., one month after getting the Deutsche Bank loan, according to public records.
Smith could not be reached for comment. The telephone number at the Georgetown home has been disconnected and Smith's telephone number in Georgia is not listed.
Timothy Killen, a lawyer representing Deutsche Bank, did not return a telephone call seeking comment.
Deutsche Bank said in the lawsuit that it is waiving its right to a deficiency judgment, which means Smith will not have to repay the difference between the loan amount and what the home sells for in a foreclosure auction if a balance remains.
Data from the Coastal Carolinas Association of Realtors shows the average sale price for homes in The Arbors subdivision is $161,980. Georgetown County property records show Smith's home has a market value of $186,200.
It is not clear how the home qualified for loans totaling more than the home's stated value.
Documents show Smith knew at least three weeks before she received the Nov. 8 loan that Five Rivers was closing and that she would be out of a job.
In an Oct. 16 memo to the nonprofit's board of directors, Smith said Five Rivers does "not have any visible means of support."
It is not clear whether the mortgage company knew about Five Rivers' problems when it approved Smith's loan.
Smith purchased the home at 224 Robert Conway Court for $190,000 in May 2005.
Smith initially refinanced the home on June 13, taking out a $257,000 loan that paid off her original mortgage and gave her a $67,000 equity payment.
Smith refinanced the home again Nov. 8 with two loans - the $252,000 loan from Deutsche Bank and a $62,000 second mortgage from IndyMac Bank. Those loans paid off the June 13 mortgage and gave Smith an additional $57,000 equity payment.
IndyMac Bank has not filed a lawsuit about the second mortgage, and there is no public record showing that loan's payments are late.
The foreclosure is the latest in a growing list of legal problems for Smith and her mother, Beulah White, who was executive director of Five Rivers.
BB&T last month foreclosed on 3.03 acres of land Five Rivers owned because the nonprofit agency failed to pay a $30,000 mortgage. Also last month, the state's Department of Revenue filed a $1,401.96 tax lien against Five Rivers for failing to pay employee withholding taxes.
In addition, the U.S. Department of Housing and Urban Development has ordered White and Smith to repay $418,180 in misspent federal grants and the state's 15th Judicial Circuit Solicitor's Office is conducting a criminal investigation of the two women to see if they misspent other public money.
Five Rivers was supposed to help low-income residents find jobs and buy homes, but an investigation by The Sun News showed most of the agency's money went to White, Smith and other family members.
White and Smith each could face up to five years in prison and $250,000 fines if they are convicted of fraudulently using the HUD grant money. Each woman also could face civil fines of up to $10,000 and restitution of three times the amount of money the government says it lost.
Mike Zerega, a spokesman for HUD's inspector general, said the office will not comment on Five Rivers unless an indictment is issued.
The Sun News' reports showed that most of the $5 million in state and federal grants Five Rivers received between 1995 and 2006 went to pay salaries, health and life insurance, travel, meals and other expenses that benefited White and her children.
Five Rivers went out of business Nov. 10, and state law calls for the nonprofit's assets to be distributed to similar agencies. However, Five Rivers' executives have failed to file the necessary dissolution papers with the S.C. attorney general's office.
Five Rivers' ex-Chief Financial Officer Ayoluwa Dayo Smith faces a foreclosure lawsuit by her lender.